Business Partner Protection?

[w1z4rd]

So I have a couple of business`s doing well. I want to start another one with someone I have known for a long time. In his past he was a little dodgy and got himself into much debt, however over the last 10 years he has been very stable and I trust him. Problem is he has a judgement against his name and he is slowly paying back the debt he made as a youngster.

I want to create a business with him but I am not sure on the best way to go about it. I dont want his past indiscretions to come back and bite our business in the ass.

Do I try find a CC to buy to setup with him. I think a CC protected you from this type of thing? (not sure). How is the business protected in a PTY LTD?

What would you recommend?

 

[biometrics]

Debt prescribes after 5 or 8 years doesn't it.

 

[w1z4rd]

Debt prescribes after 5 or 8 years doesn't it.

This is a debt for property he bought. Those never prescribe.

 

[HavocXphere]

no lose the cc idea. go full pty ltd. they're cheap now. you don't even need an audit/review in this case.

the main issue is that if his finances go belly up & someone goes after his assets then the shares in the company are part of those assets. then those get sold to some random guy.

now i'm not a lawyer, but you should be able to fix the problem with a clever clause in the MOI. Something like "Should any shareholder decide to sell his shares or become bankrupt, the surviving shareholders have first right to buy the shares at a fair value determined via DFCF by a registered auditor".

Or something like that. There is a similar clause for preemptive rights in the Co Act, but I think it only covers new share issues.

Also push for 51% if you can. Volunteer to chip in more cash than he does if need be.

And think carefully about making him a director...a directors signature is more powerful than people understand.

Also, I'm enjoying a fine glass of wine atm, so take the above with a pinch of salt. k?

Debt prescribes after 5 or 8 years doesn't it.

Not if you acknowledge it afaik.

 

[minty203]

I'm not exactly sure how the debt thing works, but I understand that if he is sticking to the agreement and paying back the debt, then the lawyers who handled it then, should have had the judgement removed from his credit record. But if you trust him none the less, then all good.

CC's have less shlep involved. There are businesses that sell CC's, but they usually want a lot of money for them because of the scarcity. The protection from creditors attacking a CC's or pty ltd's assets are about the same. The conditions of shareholding, and liability can be addressed in the memorandum of incorporation.

There are many people who incorporate companies for you. Anybody can do it really. But I advise you to get a lawyer (with knowledge on company law) to handle the incorporation for you.

Debt prescribes in 3 years, but I believe the main condition is that the creditor must have made no contact with the debtor regarding the debt within this time(or something like that).

 

[HavocXphere]

I'm not exactly sure how the debt thing works, but I understand that if he is sticking to the agreement and paying back the debt, then the lawyers who handled it then, should have had the judgement removed from his credit record. But if you trust him none the less, then all good.

CC's have less shlep involved. There are businesses that sell CC's, but they usually want a lot of money for them because of the scarcity. The protection from creditors attacking a CC's or pty ltd's assets are about the same. The conditions of shareholding, and liability can be addressed in the memorandum of incorporation.

There are many people who incorporate companies for you. Anybody can do it really. But I advise you to get a lawyer (with knowledge on company law) to handle the incorporation for you.

Debt prescribes in 3 years, but I believe the main condition is that the creditor must have made no contact with the debtor regarding the debt within this time(or something like that).

Why? I don't see anything particularly hectic about the incorporation process?

Well aside from CIPC being fckin slow....

 

[minty203]

Incorporation is simple. My concern is the specific changes regarding liability (and wording) to the standard MOI that would have to be made. Years down the line, if the fit hits the shan, then the importance of these finer details may come into play. I believe in his case, he should get a watertight MOI.

My old man warned me that the accounting profession would turn me into a prude. And I remember telling him that I would never become that way. Lol.

CIPC takes time ya. But I have heard that if you go to their offices in Pretoria personally with the necessary documents, they register the company for you the same time. Anybody can vouch for that?

 

[Segg]

AFAIK the shareholders and the actual business are separate legal entities for CC, PTY LTD and Ltd so as long as you trust him not to make any deals behind your back regarding the business you & the business should be fine